German Government Rubber Stamps Blockchain Strategy

Reading Time: 2 minutes

The German Federal government has rubber stamped the country’s proposed blockchain strategy, which could usher in a wave of funding for research and development of blockchain-based products such as digital bonds and asset tokenization. Chancellor Angela Merkel’s cabinet gave the strategy the official seal of approval in a move that many feel ends the chances of Facebook’s Libra token being used in the country, and could usher in a sovereign cryptocurrency in its place.

Bundes-Chain to Get the Green Light?

Germany’s blockchain strategy has been in the works since June, with part of the strategy including the potential development of a so-called ‘Bundes-Chain’, a government-owned blockchain that would allow a national stablecoin to be developed and used within the country, similar in principle to the digital Yuan being rolled out in China. This is being seen by some, including Christian Democratic Union (CDU) parliamentarian and blockchain specialist Thomas Heilmann, as a direct response to Facebook’s Libra token, which Heilmann said last week could not be allowed.

New Wave of Blockchain-based Financial Instruments

As well as developing an in-house blockchain and possible sovereign cryptocurrency, German business paper Handelsblatt also says that Germany’s ruling parties, the Grand Coalition, wants to push ahead with the promotion and development of a wide variety of tokenized financial instruments, seeing blockchain as a way of breathing new life into the likes of bonds and debt. This is gleaned from the literature concerning the blockchain strategy released by the government:

Using blockchain technology, all imaginable values, rights and obligations in tangible and intangible goods can be represented by tokens and their trade and interchangeability can potentially be simplified.

This blockchain push will be achieved thanks to Germany possessing a “dynamic ecosystem of developers and providers of blockchain-based services” ready and waiting to take up the challenge, which represents “a promising basis for the development of a token economy”. This is despite top-end IT research being, in the words of Handelsblatt, “chronically underfunded”. That could all be about to change, however; the newspaper states that by 2019 the Grand Coalition wants to “open German law for electronic securities” – in other words they want to prepare a legal framework for blockchain bonds, with blockchain debt instruments to follow. Should this prove to be a success, it is extremely likely that other nations would follow, meaning that the financial landscape could look and operate very differently in 5-10 years time.